Government’s Agricultural Plan, with specific reference to the National Development Plan (NDP) John Purchase 12 February 2015
New National MTSF (2014-2019) of 14 Outcomes Growth Develop- Path ment Plan (NGP) (NDP) Outcome 7 - Outcome 4 – Outcome 10 - Comprehensive Protect and Decent Employment rural development enhance our through inclusive and food security environmental growth assets and natural NDP: Chapter 6 6 Job Drivers resources Agriculture Infrastr. Mining (Mining Policy Action Plan) Productive Pres. Infra. Manufacturing Industrial Policy Action Plan (IPAP) Sector Forum Co. Comm. (PICC) Tourism IGDP Green Economy oury (Policy SIP 11 Framework) Agric Policy Action Plan (APAP 5 yr iterative plan) Source: DAFF, 2014
National Development Plan - D eveloped by the National Planning Commission - Originates from 2009 ANC election Manifesto: “The developmental state will play a central and strategic role in the economy. We will ensure a more effective government; improve the coordination and planning efforts of the developmental state by means of a planning entity to ensure faster change ’’. - Medium Term Strategic Framework (MTSF) for 2014-2019, the first five- year building block of the National Development Plan. - The MTSF will also include key targets from the New Growth Path, the Industrial Policy Action Plan, the Agricultural Policy Action Plan , and the national infrastructure plan.
1. Expand irrigated agriculture 2. Convert under-used land in communal areas and land reform projects to commercial production 3. Pick and support sectors with highest potential for growth and jobs 4. Support job creation in up- and downstream industries 5. Find creative combinations between opportunities 6. Develop strategies that give access to product value chains
Recommendations To expand agriculture and create 1 million jobs in the sector, the Commission makes the following recommendations: 1. Substantially increase investment in water and irrigation infrastructure 2. Invest in market linkages for small-scale farmers 3. Preferential procurement mechanisms to allow market access to new entrants 4. Create tenure security for communal farmers 5. Investigate different forms of financing and vesting of property rights for land reform beneficiaries 6. Greater support for Public-Private Partnerships 7. Increase and refocus investment in R&D in sector 8. Improve and extend skills development and training 9. Innovative means of extension and training in partnership with industries
IG IGDP Fundamentals: Development • IGDP takes its cue from 14 outcomes in the MTSF (2014 – 2019) to address key challenges: - Outcome 4: D ecent employment through inclusive economic growth - Outcome 7: V ibrant, equitable and sustainable rural communities contributing towards food security for all - Outcome 10: P rotect and enhance our environmental assets and natural resources • IGDP National Reference Group established (Agbiz involvement) • ‘Alignment’ with other key government processes (Land Reform Green Paper, NGP, NPC, etc.) • Not yet officially adopted by Cabinet.
Structure of f IG IGDP: • Situation Analysis - Sector profile - Policy Framework • Current Realities and Challenges: 4 key pillars - Equity and Transformation - Equitable growth and competitiveness - Ecological sustainability - Governance • IGDP Implementation Plan • Costs and financing • Monitoring and evaluation
Agricultural Policy Action Plan • A detailed analysis of challenges is given in the IGDP. Based on this analysis, the IGDP also outlines appropriate responses. • APAP seeks to translate the high-level responses offered in the IGDP, into tangible, concrete steps. • However, this first iteration of APAP is not offered as a fully comprehensive plan. • The APAP, for its medium to long term goal as set out in the IGDP, is planned over a five year period, and will be updated on an annual basis. • Over-arching objectives of APAP are to - promote labour absorption and - broaden market participation. • Value Chain approach, but still to be finalized.
Medium Term Strategic Framework (M (MTSF) The 2014 – 2019 MTSF for the rural sector will focus primarily on 7 imperatives that are a core foundation for an inclusive and integrated rural economy, and are as follows: 1. Improved land administration and spatial planning for integrated development, with a bias towards rural areas (SPLUMA). 2. Improved and sustainable agrarian reform and food security. 3. Smallholder farmer development and support (technical, financial, infrastructure). 4. Increased access to quality basic infrastructure and services, particularly in education, healthcare and public transport. 5. Sustainable rural enterprises and industries characterised by strong rural-urban linkages, increased investment in agro-processing, trade development and access to markets and financial services 6. Reduce rural unemployment. 7. Improved integration and coordination of rural development across all spheres of government and between government departments as a result of implementation of synchronised rural development strategies.
Agri ribusin iness Agri-business comprises largely agricultural input suppliers and the agro-processing sector. Trend data for agro-processors suggests that over the past two decades it has followed a similar pattern to primary agriculture – modest real growth coupled with declines in formal sector jobs. The development trajectory of both input suppliers and agro-processors resembles that of many other countries, namely a trend to towards s hig higher levels of of industry try concentration. Concentration ratios by total income for top 5 and top 10 enterprises, CR5 CR10 2008 Agro-processors Food products and beverages 30% 40% Prodn, processing & preserving of meat, fish, fruit, vegetables, oils & fats 30% 43% Dairy products 71% 81% Grain mill products, starches, starch products and prepared animal feeds 70% 79% Bakery products, sugar, chocolate, etc. 58% 84% Beverages 80% 86% Textiles, clothing, leather and footwear 17% 23% Wood, wood products, paper, publishing and printing 30% 41% Agro-input manufacturers Fertilisers, nitrogen compounds, plastics and synthetic rubber 87% 92% Agricultural and forestry machinery 23% 33%
Trends in formal and informal employment in agro-processing, 1970-2010
Poultry/Soybeans/Maize Integrated Value Chain Poultry/soybeans/maize integrated value chain: The broiler industry is South Africa’s largest agricultural subsector in terms of value of production. The industry is also a complex integrated industry with different commodities (soya beans and yellow maize) feeding into it. The industry is seen as a medium performer in terms of labour absorption. Although the industry grew above inflation for the past decade, for the past several years it has been in distress due to high feed cost and imports. Product Labour indicator Real average growth Market share Volatility index Trade balance Import (10 years) substitution Medium Medium growth Broilers Top 15 Low volatility Net importer Yes Performer industry Medium Moderate Soybeans High growth industry Middle 15 Net importer Yes Performer volatility Medium Moderate Yellow maize Low growth industry Top 15 Net exporter NA Performer volatility Main challenges and constraints: • The increasing cost of production, especially feed and energy • The increasing cost of day old chicks, and variable quality of day old chick supply in the market • Oversupply of imports from the EU & South America • Variable control of poultry diseases • Underdevelopment of consumption in neighbouring countries • High initial investment for start up • Need for R&D to improve production systems and feed conversion ratio • Undependable electricity supply • Monopolistic behaviour of processors and retailers • Lack of official information in the market, stock population etc. • Inadequate market access for small-scale producers
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